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MARKET CLOSE: NZ shares fall, led by Heartland, Chorus as investors book profits

Tuesday 16th May 2017

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New Zealand shares fell, led by companies that have outperformed the index this year, as investors took profits from Heartland Bank and Chorus. Trading was muted ahead of corporate earnings reports later in the week.



The S&P/NZX 50 index fell 22 points or 0.3 percent to 7,407.61. Within the index, 19 stocks rose, eight were unchanged and 23 fell. Turnover was $127 million. 



Heartland Bank led the market lower, shedding 2.8 percent to $1.74. It has gained 16 percent so far this year, outperforming the 7.7 percent increase in the benchmark over the same period. Telecommunications network operator Chorus fell 2 percent to $4.49, having gained 13 percent this year. 



Peter McIntyre, an investment adviser at Craigs Investment Partners, said investors had opted to take some profit given recent gains. Chorus "has had a particularly good run, ever since its inclusion in the ASX," he said. 



McIntyre said trading volumes were light ahead of company earnings later this week, and that New Zealand's market had bucked a positive session in the US and Australia, which were largely driven by higher oil prices. Brent crude has gained nearly 9 percent over the last week.  



"New Zealand seems to lack a few of those listed entities and we are slightly softer," he said. New Zealand Oil & Gas was unchanged at 63 cents and New Zealand Refining was unchanged at $2.46. 



Ryman Healthcare, which reports on Friday, added 0.7 percent to $8.68 as investors continued to be cheered by news announced plans for a sixth village in Australia. Investors are likely taking positions ahead of its result, he said. Goodman Property Trust, also due to report later this week, added 0.4 percent to $1.235.  



Fletcher Building fell 2.4 percent to $8.12 which McIntyre said was surprising after news the Crown-owned housing agency, Housing New Zealand, will build a net 17,207 new affordable homes over the next decade in the government's biggest new state housing announcement in more than eight years in government. 



"There is some good volume going through Fletcher Building. It may be some rebalancing happening from institutions on that particular stock," he said. Fletcher Building has been under pressure since unexpectedly weak earnings from its construction division followed by an earnings downgrade.



Metro Performance Glass, which is also tied to building activity, dropped 2.2 percent to $1.32. 



Methven sank 13 percent at $1.07 after the company said it expects annual profit will fall by as much as 15 percent because its investments didn't deliver the anticipated growth for the listed shower and tapmaker.



Units in Fonterra Shareholders' Fund were flat at $6 as investors await the results of the overnight dairy auction. Whole milk powder - which makes up the bulk of the auction - is expected to decline, according to futures pricing on the NZX. 



Abano Healthcare Group said it received notice of a counter-claim from Healthcare Partners Holdings seeking to force it to pay the January 2017 interim dividend amount of approximately $523,000. This amount was retained by Abano and set-off against a portion of the unpaid costs in relation to Healthcare Partners’ failed hostile partial takeover bid. The stock shed 2.2 percent to $2.35. 



Xero led gainers, adding 3.7 percent to $24.05.  McIntyre said investors shrugged off the news that Xero director Craig Winkler, who founded rival accounting software firm MYOB, sold down his stake in the cloud-based software firm as part of a 10-year plan to liquidate assets to fund philanthropic pursuits. The move higher continues after a solid result last week. "We have seen heightened investor interest as it moves toward breakeven," he said. 



Air New Zealand managed to shrug off higher oil prices and added 1.8 percent to $2.80 while Tegel Group pared some recent losses, increasing 0.9 percent to $1.09. 





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